account of the firm or for the purposes and in the course of its business, is declared by the act to be partnership property. Property bought with money of the firm is prima facie bought on account of the firm. Partnership property must be applied exclusively for partnership purposes and in accordance with the partnership agreement. Co-owners of land may be partners in the profits of the land without the land being partnership property; if such co-owners purchase other lands out of the profits, these lands will also belong to them (in the absence of any agreement to the contrary) as co-owners and not as partners. The legal estate in partnership land devolves according to the general law, but in trust for the persons beneficially interested therein. As between partners, and as between the heirs of a deceased partner and his executors or administrators, such land is treated as personal or movable estate, unless a contrary intention appears.
When no fixed term has been agreed upon for the duration of the partnership, it is at will, and may be determined by notice at any time by any partner. If a partnership for a fixed term is continued after the term has expired without any express new agreement, the rights and duties of the partners remain as before, so far as they are consistent with a partnership at will.
A partner may assign his share in the partnership either absolutely or by way of mortgage. The assignee does not become a partner; during the continuance of the partnership he has the right to receive the share of profits to which his assignor would have been entitled, but he has no right to interfere in the partnership business, or to require any accounts of the partnership transactions, or to inspect the partnership books. On a dissolution he is entitled to receive the share of the partnership assets to which his assignor is entitled as between himself and his partners, and for this purpose to an account as from the date of dissolution.
Since the act came into operation no writ of execution may issue in England or Ireland against any partnership property, except on a judgment against the firm. If in either of these countries a judgment creditor of a partner wishes to enforce his judgment against that partner’s share in the partnership, he must obtain an order of court charging such share with payment of his debt and interest. The court may appoint a receiver of the partner’s share, and may order a sale of such share. If a sale be ordered the other partners may buy the share; they may also at any time redeem the charge. The mode of making a partner’s share Hable for his separate debts in Scotland has not been altered by the act.
IV. Dissolution of Partnership.—A partnership for a fixed term, or for a single adventure, is dissolved by the expiration of the term or the termination of the adventure. A partnership for an undefined time is dissolved by notice of dissolution, which may be given at any time by any partner. The death or bankruptcy of any partner dissolves the partnership as between all its members. If a partner suffers his share in the partnership to be charged under the act for his separate debts, his partners may dissolve the partnership. The foregoing rules are subject to any agreement there may be between the partners. A partnership is in every case dissolved by any event which makes the partnership or its business unlawful. The court may order a dissolution in any of the following cases, viz.: When a partner is found lunatic or is of permanently unsound mind, or otherwise permanently incapable of performing his duties as a partner; when a partner has been guilty of conduct calculated to injure the partnership business, or wilfully or persistently breaks the partnership agreement, or so conducts himself in partnership matters that it is not reasonably practicable for his partners to carry on business with him; when the partnership can only be carried on at a loss; and lastly, whenever a dissolution appears to the court to be just and equitable. The act is silent as to the effect of the assignment by a partner of his share in the partnership as a cause of dissolution; probably it is now no more than a circumstance enabling the court, if it thinks fit, to grant a dissolution on the ground that it is just and equitable to do so. A dissolution usually is not complete as against persons who are not partners, until notice of it has been given; until then such persons may treat all apparent partners as still members of the firm. Consequently, if notice is not given when it is necessary, a partner may be made liable for partnership debts contracted after he ceased to be a partner. Notice is not necessary to protect the estate of a dead or bankrupt partner from partnership debts contracted after his death or bankruptcy; nor is notice necessary when a person not known to be a partner leaves a firm. If a person not generally known to be a partner is known to be so to certain individuals, notice must be given to them. Notice in the Gazette is sufficient as regards all persons who were not previously customers of the firm; notice in fact must be given to old customers. On a dissolution, or the retirement of a partner, any partner may notify the fact and require his co-partners to concur in doing so.
After a dissolution, the authority of each partner (unless he be a bankrupt) to bind the firm, and the other rights and obligations of the partners, continue so far as may be necessary to wind up the partnership affairs and to complete unfinished transactions. The partners are entitled to have the partnership property applied in payment of the debts of the firm, and to have any surplus divided between them. Before a partner can receive any part of the surplus, he must make good whatever may be due from him as a partner to the firm. To enforce these rights, any partner or his representatives may apply to the court to wind up the partnership business. It was well established before the act, and is still law, that in the absence of special agreement the right of each partner is to have the partnership property—including the goodwill of its business, if it be saleable—realized by a sale. The value of the goodwill depends largely on the right of the seller to compete with the purchaser after the sale. The act makes no mention of goodwill, but the rights of a seller in this respect were fully discussed in the House of Lords in Trego v. Hunt (L.R. 1896, App. Cas. 7). In the absence of special agreement, the seller may set up business in competition with, and in the immediate neighbourhood of, the purchaser, and advertise his business and deal with his former customers, but may not represent himself as carrying on his former business, nor canvass his former customers. The purchaser may advertise himself as carrying on the former business, canvass its customers, and trade under the old name, unless that name is or contains the name of the vendor, and the purchaser by using it without qualification would expose the vendor to the liability of being sued as a partner in the business. If, on a dissolution or change in the constitution of a firm, the goodwill belongs under the partnership agreement exclusively to one or more of the partners, the partner who is entitled to the goodwill has the rights of a seller, and those to whom the goodwill does not belong have the rights of a purchaser.
When a partner has paid a premium on entering into a partnership for a fixed term, and the partnership is determined before the expiration of the term, the court may, except in certain cases, order a return of the premium or of some part of it. In the absence of fraud or misrepresentation, the court cannot make such an order when the partnership was at will, or, being for a fixed term, has been terminated by death or by reason of the misconduct of the partner who paid the premium; nor can it do so if terms of dissolution have been agreed upon, and the agreement makes no provision for the return of premium.
When a person is induced by the fraud or misrepresentation of others to become a partner with them, the court will rescind the contract at his instance (Adam v. Newbigging, 1888, R. 13 App. Cas. 308). Inasmuch as such a person is under the same liability to third parties for liabilities of the firm incurred before rescission as he would have been under had the contract been valid, he is entitled on the rescission to be indemnified by the person guilty of the fraud or making the representation against these liabilities. He is also entitled, without prejudice
